14.03.2008, 16:08
Standard & Poor's Affirmed Russian Bank for Development Ratings
OREANDA-NEWS. On March 12, 2008, Standard & Poor's Ratings Services placed the ratings on two Russia-based government-owned financial sector institutions, “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” (VEB) and OAO “Russian Bank for Development” (RBD), on positive outlook. At the same time, the ratings on both entities were affirmed.
The outlook revision follows the revision of the outlook on The Russian Federation ratings (Russia; foreign currency BBB+/Positive/A-2; local currencyA-/Positive/A-2) - it was revised to Positive on March 11, 2008.
The primary purpose of the above said development banks is to finance investment projects and small and medium enterprises. A satisfactory level of capitalization provided by the Russian government, the banks' owner, underlines their clear public role.
Recent consolidation efforts, as evidenced by the Law on the Development Bank (passed in May 2007 and expected to be implemented during 2008), are expected to result in RBD either becoming a subsidiary of VEB or being fully merged into the bank by the end of 2008. In either event, we expect that VEB will honour obligations originally incurred by RBD.
Outlook
The positive outlook on the ratings of VEB and RBD mirrors that on Russia. We expect that the government will provide ongoing strong support and that both banks will continue to play a strong public policy role in the area of development-related financing. It is expected that the assets and liabilities of the much smaller RDB will be incorporated into VEB, in addition to the bank's capital. This is already prescribed by the Law, which was adopted in 2007.
As we expect sovereign support to remain solid after the restructuring, the ratings on VEB will remain unaffected, while the positive outlook on RBD's long-term local currency rating reflects our expectation that the planned partial consolidation or merger with VEB will ultimately stre
The outlook revision follows the revision of the outlook on The Russian Federation ratings (Russia; foreign currency BBB+/Positive/A-2; local currencyA-/Positive/A-2) - it was revised to Positive on March 11, 2008.
The primary purpose of the above said development banks is to finance investment projects and small and medium enterprises. A satisfactory level of capitalization provided by the Russian government, the banks' owner, underlines their clear public role.
Recent consolidation efforts, as evidenced by the Law on the Development Bank (passed in May 2007 and expected to be implemented during 2008), are expected to result in RBD either becoming a subsidiary of VEB or being fully merged into the bank by the end of 2008. In either event, we expect that VEB will honour obligations originally incurred by RBD.
Outlook
The positive outlook on the ratings of VEB and RBD mirrors that on Russia. We expect that the government will provide ongoing strong support and that both banks will continue to play a strong public policy role in the area of development-related financing. It is expected that the assets and liabilities of the much smaller RDB will be incorporated into VEB, in addition to the bank's capital. This is already prescribed by the Law, which was adopted in 2007.
As we expect sovereign support to remain solid after the restructuring, the ratings on VEB will remain unaffected, while the positive outlook on RBD's long-term local currency rating reflects our expectation that the planned partial consolidation or merger with VEB will ultimately stre
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